Agriculture’s Missing Capital: Financing the MSMEs that Feed Nigeria

Agriculture is one of Nigeria's largest economic sectors and a major source of livelihoods, yet it continues to receive a modest share of formal credit. According to National Bureau of Statistics (NBS, 2026), agriculture accounted for 27.55% of GDP in 2025, while bank credit to the sector represented only 6.30% of total bank credit to the private sector. This is the central paradox: the sector that feeds the country employs millions, and anchors rural enterprise remains financed as though it were marginal to national transformation.

The issue is not whether agriculture matters. That argument is settled. The real question is whether Nigeria is willing to finance agriculture in a way that reflects its economic weight, job intensity and food-security importance. For too long, agricultural finance has been treated as a narrow sector problem. In reality, it is a national productivity problem, a jobs problem, and a resilience problem.

Fig. 1: Agriculture: Economic Weight vs Credit Allocation

Agriculture contributes more than a quarter of GDP, but receives a much smaller share of private sector bank credit

Data Source: CBN Statistical Bulletin

Between 2014 and 2025, bank credit to agriculture rose from N478.91 billion to N3.61 trillion. In absolute terms, this is important progress. Agriculture's share of total private sector credit also improved from 3.72% in 2014 to 6.30% in 2025. But the proportion remains far below the sector's contribution to GDP, which stood at 27.55% in 2025.

The mismatch is revealing. Formal finance is expanding, but not yet at the scale required to unlock the sector's full productive potential. Agriculture's GDP contribution has remained consistently high, rising from 22.90% in 2014 and peaking at 29.30% in 2021 before moderating to 27.55% in 2025. The sector has proven its weight in the economy. The financing system, however, has not yet caught up.

Fig. 2a: Agriculture Lending against Total Private Sector Credit

Bank credit to agriculture is expanding, but not yet commensurate with the sector’s economic weight

Data Source: CBN Statistical Bulletin

Viewed against agricultural GDP, credit increased from 3.11% in 2014 to 5.91% in 2025. This confirms that financing depth improved over the period, but the increase was less dramatic than the nominal credit series suggests. The ratio also remained uneven, rising above 5% in 2020–2022, falling in 2023–2024, and recovering in 2025.

Fig. 2b: Agricultural Credit as a Share of Agricultural GDP

Agricultural credit deepened relative to sector output, but remained below 6% of agricultural GDP in 2025.

Data Source: CBN Statistical Bulletin

Agriculture in Nigeria is not driven by a small number of large firms alone. It is powered by millions of small farmers, processors, aggregators, input suppliers, transporters, storage operators, and traders who connect the farm to the market. These enterprises carry the sector's daily risks: weather shocks, price volatility, logistics failures, thin margins, weak collateral, and seasonal cash flows.

About 70% of Nigerian households participate in agricultural activity, representing about 40.2 million agricultural households, while the sector employs over 25 million Nigerians, or 30.1% of the workforce (NBS, 2024a; NBS, 2024b). Smallholder farmers also account for approximately 90% of agricultural production (U.S. International Trade Administration, 2025). This is why the MSME lens matters. Without viable agricultural MSMEs, finance does not reach production. Jobs do not reach communities. Food does not move efficiently from farms to urban markets. Credit, when designed properly, becomes working capital for planting, equipment for processing, mobility for distribution, and resilience for households whose livelihoods depend on the agricultural economy.

Every underfinanced agricultural MSME represents more than a missed loan opportunity. It represents unrealised output, delayed expansion, weaker market linkages and fewer jobs. This is especially important because agriculture is among the few sectors with the ability to absorb labour across skill levels and locations. The sector creates direct work on farms, indirect work in processing and logistics, and income opportunities in trade, services, and digital platforms around the agricultural value chain.

Agricultural finance demand in Nigeria is estimated at over N83 trillion, or about US$200 billion, yet formal supply remains far below this requirement (Steemers et al, 2022). For a development finance institution, this is where the investment case becomes compelling. Agriculture is high-impact not because it is traditional, but because it is deeply connected to food prices, household income, rural stability, women-led enterprise, climate adaptation, and national competitiveness. Financing agricultural MSMEs is therefore not charity but a practical development strategy.

DBN’s role is not limited to increasing the volume of lending to agriculture. The deeper opportunity is to demonstrate what smarter, more patient, and better-targeted MSME finance can achieve in a sector that commercial credit has historically found difficult to serve. It also involves working with participating financial institutions to address the constraints facing agricultural MSMEs. This requires financing approaches that respond directly to their operating realities. In practice, five priorities stand out:

1. Cash-flow-aligned finance: Match loan tenors and repayments to agricultural production and sales cycles.
2. Value-chain financing: Link funding to credible aggregators, off-takers and structured market relationships.
3. Risk-sharing mechanisms: Use guarantees, insurance and blended finance to strengthen participating financial institutions’ risk appetite.
4. Technical assistance: Improve bookkeeping, governance, climate resilience and investment readiness.
5. Data and outcome discipline: Use better market information and measurable outcomes to guide lending decisions.

DBN's own experience provides a useful illustration. Annual disbursements to agricultural MSMEs rose from ₦5.16 billion in 2018 to ₦35.42 billion in 2025, before moderating to ₦33.49 billion in Q1 2026. More importantly, these investments provide insights into where finance is working, which subsectors are generating jobs, where women-owned enterprises face the sharpest constraints, and what financing structures are better suited to agricultural cash-flow cycles.

Fig. 3: DBN Loan Disbursements to Agriculture

DBN agriculture disbursements show rising development finance support for agricultural MSMEs

Data Source: DBN

The employment signal is equally important. In 2025, DBN channelled more than ₦35 billion to over 9,000 agribusinesses, with supported enterprises reporting 29,879 jobs created or sustained. That is the development finance logic in practical terms: when agricultural MSMEs receive finance, the effect can move beyond balance sheets into livelihoods, enterprise growth, and job creation.

The challenge is no longer proving that agriculture deserves more finance. The real challenge is designing the kind of finance that enables agricultural MSMEs to become more productive, bankable, and job-creating.

Women make up 36.2% of Nigeria's agricultural workforce, yet female-owned agricultural enterprises remain among the most credit-constrained participants in the value chain (NBS Labour Force Survey, 2023). DBN’s disbursements to female-owned agricultural MSMEs increased from ₦0.65 billion in 2018 to ₦5.11 billion in 2026, while cumulative flows to women reached about ₦20.4 billion, representing roughly 15.3% of agriculture disbursements. Expanding access to finance for women is not only an inclusion objective; it is also an opportunity to strengthen productivity, improve household incomes, and widen the development impact of agricultural finance.

Fig. 4: Agricultural Loans to Female MSMEs

Financing to female-owned agricultural MSMEs is increasing, but the inclusion gap remains material.

Data Source: DBN

Snapshot: the financing mismatch

Nigeria does not merely need more agricultural credit. It needs finance designed around agricultural cash flows, value-chain relationships, and the operating realities of MSMEs. The priority is to expand access without weakening credit discipline, using longer horizons where necessary, stronger risk-sharing arrangements, better market information, and technical support that improves business resilience and investment readiness.

DBN will continue to help lead this transition by equipping participating financial institutions to lend with better risk information, stronger market linkages, and measurable development outcomes. The goal is not credit growth for its own sake, but finance that enables agricultural MSMEs to plant, process, store, move, and sell more efficiently, while creating jobs, strengthening food security, and widening inclusive growth.

CBN (2025). Quarterly statistical bulletin (Vol. 14, No. 3). Central Bank of Nigeria, Abuja

Development Bank of Nigeria. (n.d.). MSME analytics dashboard.

NBS (2024a). National Agricultural Sample Census 2022: Report on the listing and community survey questionnaires. National Bureau of Statistics, Abuja

NBS (2024b). Nigeria Labour Force Survey: Annual report 2023. National Bureau of Statistics, Abuja

NBS (2026). Nigerian Gross Domestic Product report: Fourth quarter and full year 2025. National Bureau of Statistics, Abuja

Steemers, S., Bagu, B., & Adams, S. (2022). Addressing the $200 billion demand for finance for agriculture and agribusiness in Nigeria. Netherlands Enterprise Agency

International Trade Administration. (2025, September 8). Nigeria: Agriculture sector. US Department of Commerce.